- Fixed assets costing $8,000 with a book value of $3,000 were sold for $6,000.

- Long term investments costing $5,000 were sold for $5,000.

-Redeemed $5,000 of the bond issuance.

- Sold stock___________.

-Paid dividends_________.

All other transactions involved cash.

Be certain you have accounted for all the changes in the account line items somewhere in your 3 areas of SCF (ex. Fixed Assets account went from $28K to $40k - we did not just buy $12K this year....)

2020     2019

Cash $30,000 $16,000

Acct Receivable 7,000                               5,000

Ppd Insurance 2,000 3,000

Inventory 13,000 11,000

L-T Investments 22,000                         27,000

Fixed Assets 40,000 28,000

Acc Depreciation 8,000                               6,000

Acct Payable 16,000                         14,000

Interest Payable 4,000                           ----000—

Taxes Payable 6,000 4,000

Bond Payable 20,000 25,000

Common Stock 21,000                         20,000

APIC 3,000                                      0

Retained Earnings 36,000                         21,000

Sales $120,000

-COGS   -   60,000

Gross Profit 60,000

- Operating Expenses   -   20,000  

Income from Operations 40,000

+/- Other

           Interest Expense -2,000

Gain on Sale of Equip +3,000        

Taxable Income 41,000

-Tax   -8,000

Net Income $33,000

Required: Prepare the Statement of Cash Flows for Operating, Investing and Financing using both the indirect and direct methods for Operating.

Taylor’s is a popular restaurant that offers customers a large dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant, has seen the number of patrons increase steadily over the last two years and is considering whether and when she will have to expand its available capacity. The restaurant occupies a large home, and all the space in the building is now used for dining, the bar, and kitchen, but space is available on the property to expand the restaurant. The restaurant is open from 6 p.m. to 10 p.m. each night (except Monday) and, on average, has 27 customers enter the bar and 52 enter the dining room during each of those hours. Taylor has noticed the trends over the last 2 years and expects that within about 4 years, the number of bar customers will increase by 50% and the dining customers will increase by 20%. Taylor is worried that the restaurant will be not be able to handle the increase and has asked you to study its capacity. In your study, you consider four areas of capacity: the parking lot (which has 82 spaces), the bar (56 seats), the dining room (102 seats), and the kitchen. The kitchen is well-staffed and can prepare any meal on the menu in an average of 12 minutes per meal. The kitchen, when fully staffed, is able to have up to 20 meals in preparation at a time, or 100 meals per hour (60 min/12 min × 20 meals).

To assess the capacity of the restaurant, you obtain the additional information: Diners typically come to the restaurant by car, with an average of 3 persons per car, while bar patrons arrive with an average of 1.5 persons per car. Diners, on average, occupy a table for an hour, while bar customers usually stay for an average of 2 hours. Due to fire regulations, all bar customers must be seated. The bar customer typically orders one drink per hour at an average of $9 per drink; the dining room customer orders a meal with an average price of $20; the restaurant’s cost per drink is $3, and the direct costs for meal preparation are $3.

Required: 1-a. Given the current number of customers per hour, what is the amount of excess capacity in the bar, dining room, parking lot, and kitchen? 1-b. Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month). 2-a. Given the expected increase in the number of customers, determine if there is a constraint for any of the four areas of capacity. What is the amount of needed capacity for each constraint? 2-b. If there is a constraint, reduce the demand on the constraint so that the restaurant is at full capacity (assume some customers would have to be turned away). Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month).

Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 990 hours each month to produce 1,980 sets of covers. The standard costs associated with this level of production are:

During August, the factory worked only 1,000 direct labor-hours and produced 2,200 sets of covers. The following actual costs were recorded during the month:

At standard, each set of covers should require 3.0 yards of material. All of the materials purchased during the month were used in production.

Required:

1. Compute the materials price and quantity variances for August.

2. Compute the labor rate and efficiency variances for August.

3. Compute the variable overhead rate and efficiency variances for August.

(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Blossom Corporation, a private corporation, was formed on July 1, 2018. On July 31, Guy Gélinas, the company’s president, prepared the following statement of financial position:

Guy admits that his knowledge of accounting is somewhat limited and is concerned that his statement of financial position might not be correct. He gives you the following additional information:

Prepare a corrected statement of financial position. (Hint: To get the balance sheet to balance, adjust Common Shares). (List Assets in order of liquidity.)

As of December 31, 2020, Ahab Fisheries Inc. had the following share capital:

·       50,000 common shares                                             $200,000

·       80,000 $2, non-cumulative, preferred shares $600,000

During 2021, the following share transactions occurred:

·       April 1   Issued 10,000 common shares for cash of $ 45,000

·       July 1    Issued 20,000 common shares at $ 4.75 each

·       Dec 15 Cash dividends were declared for the preferred shares only.

For the year ending December 31, 2021, Ahab had profit of $ 323,000.

Required

a)      Calculate the profit available to common shareholders in 2021.

b)      Calculate the weighted average number of common shares in 2021.

c)      Calculate the earnings per share in 2021. (1 mark)

Purple Co.'s production budget for Product X for the year ended December 31 is as follows:

In Purple's production operations, Materials A, B, and C are required to make Product X.

The quantities of direct materials expected to be used for each unit of product are as follows:

The prices of direct materials are as follows:

Prepare a direct materials purchases budget for Product X, assuming that there are no beginning or ending inventories for direct materials (all units purchased are used in production).

Chapter 13

1. The following financial statement data is available for the Scottsdale Company for Dec. 31, 2019. (30 pts)
   
   Comparative Balance Sheet Data
   
                                                                    2019                  2018
   Cash                                                    $ 39,835         $    4,000
   Accounts Receivable                               17,500             12,950
   Dividends Receivable                               1,000                      0
   Inventory                                                42,000             35,000
   Prepaid rent                                               3,000             12,000
   Prepaid insurance                                      2,100                  900
   Office supplies                                          1,000                  750
   Long-term investments                           20,000             30,000
   Land                                                    125,000         175,000
   Building                                              350,000         350,000
   Accumulated depreciation, Building (105,000)        (87,500)
   Equipment                                           525,000         400,000
   Accumulated depreciation, Equipment (130,000)      (112,000)
   Patent                                                      45,000             50,000
               Total assets                             $ 936,435       $ 871,100
   
   Accounts payable                                $    26,000       $   30,000
   Income taxes payable                                  5,000              4,000
   Wages payable                                            5,000              3,000
   Short-term notes payable                          10,000            10,000
   Dividends payable                                      1,500                   0
   Unearned Income                                           500              2,000
   Accrued Liabilities                                      5,303            10,853
   Long-term notes payable                          60,000            70,000
   Bonds payable                                         415,000          415,000
   Common stock ($10 par)                        290,000          220,000
   Paid-in capital in excess of par                 46,410            17,500
   Retained earnings                                    106,722            88,747
   Treasury Stock                                       (35,000)                     0       
               Total liabilities and equity      $ 936,435       $ 871,100
   
   
   
   
   
   
   
   
   
   Income Statement
   
   Sales revenue                                                                          $1,160,000
   Cost of goods sold                                                                  (    748,000)
   Gross profit                                                                                  412,000
   Operating expenses                                                                 (    276,400)
   Income from operations                                                               135,600
   Other revenues/expense
   Gain on sale of land                                         8,000
   Gain on sale of long-term investment             4,000
   Dividend revenue                                             2,400
   Interest expense                                            (51,750)           (     37,350)
   Income before taxes                                                                      98,250
   Income tax expense                                                                (     39,400)
   Net income                                                                                    58,850
   
   Instructions:

• Prepare a statement of cash flows in proper form for 2019 using the Indirect method. Then, redo the Operating Section only using the Direct method.

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued? Y or N

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Contribution Margin Analysis—Sales

Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $31,875 from the planned level of $1,048,125. The following information is available from the accounting records for the year ended December 31.

a. Prepare an analysis of the sales quantity and unit price factors. Use a minus sign for any negative amounts.

b. Did the price decrease generate sufficient volume to result in a net increase in contribution margin if the actual variable cost per unit was $10, as planned?

Required information

[The following information applies to the questions displayed below.]

Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given:

3. Assume that sales in Chicago increase by $35,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).)

E6-4 Analyzing Changes in Price, Cost Structure, Degree of Operating Leverage [LO 6-4, 6-5]

Cove’s Cakes is a local bakery. Price and cost information follows:

Required:
1. Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answer to the nearest whole number.)

a. Sales price increases by $1.50 per cake.



b. Fixed costs increase by $475 per month.



c. Variable costs decrease by $0.25 per cake.



d. Sales price decreases by $0.40 per cake.



2. Assume that Cove sold 355 cakes last month. Calculate the company’s degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.)



3. Using the degree of operating leverage calculated in Requirement 2, calculate the change in profit caused by a 6 percent increase in sales revenue. (Round your final answer to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

Ferkil Corporation manufacturers a single product that has a selling price of $20.00 per unit. Fixed expenses total $63,000 per year, and the company must sell 9,000 units to break even. If the company has a target profit of $17,500, sales in units must be:
Multiple Choice
•   10,682 units
•   9,875 units
•   11,500 units
•   12,150 units

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Data concerning Bedwell Enterprises Corporation's single product appear below:

         
Selling price per unit   $   180.00
Variable expenses per unit   $   93.50
Fixed expense per month   $   435,690


The unit sales to attain the company's monthly target profit of $23,000 is closest to: (Do not round intermediate calculations.)

Garrison 16e Rechecks 2018-06-19
Multiple Choice
•   5,037
•   2,548
•   4,906
•   5,303

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Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

         
Selling price   $   95
         
Units in beginning inventory      0
Units produced      3,400
Units sold      3,030
Units in ending inventory      370


         
Variable costs per unit:        
Direct materials   $   20
Direct labor   $   34
Variable manufacturing overhead   $   6
Variable selling and administrative expense   $   4
Fixed costs:        
Fixed manufacturing overhead   $   64,700
Fixed selling and administrative expense   $   2,800


The total contribution margin for the month under variable costing is:
Multiple Choice
•   $26,430
•   $93,930
•   $29,230
•   $106,050
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Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

         
Selling price   $   135
         
Units in beginning inventory      0
Units produced      3,200
Units sold      2,660
Units in ending inventory      540


         
Variable costs per unit:        
Direct materials   $   53
Direct labor   $   23
Variable manufacturing overhead   $   7
Variable selling and administrative expense   $   8
Fixed costs:        
Fixed manufacturing overhead   $   41,600
Fixed selling and administrative expense   $   26,600


The total gross margin for the month under the absorption costing approach is:
Multiple Choice
•   $77,140
•   $103,740
•   $82,460
•   $159,600

On January 1, 2021, Instaform, Inc., issued 12% bonds with a face amount of $45 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 14%. Interest is paid semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1-a. Determine the price of the bonds at January 1, 2021.
1-b. Prepare the journal entry to record their issuance by Instaform.
2-a. Assume the market rate was 11%. Determine the price of the bonds at January 1, 2021.
2-b. Assume the market rate was 11%. Prepare the journal entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

Please answer all questions from Req1A, 1B,2A,2B and Req3. Thank you.

Case 11A-7 Transfer Pricing; Divisional Performance [LO11-5] Weller Industries is a decentralized organization with six divisions. The company’s Electrical Division produces a variety of electrical items, including an X52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for $8.10 each; the fitting has a variable manufacturing cost of $4.58. The company’s Brake Division has asked the Electrical Division to supply it with a large quantity of X52 fittings for only $6.10 each. The Brake Division, which is operating at 50% of capacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufacturer. The cost of the brake unit being built by the Brake Division follows: Purchased parts (from outside vendors) $ 23.20 Electrical fitting X52 6.10 Other variable costs 14.32 Fixed overhead and administration 8.30 Total cost per brake unit $ 51.92 Although the $6.10 price for the X52 fitting represents a substantial discount from the regular $8.10 price, the manager of the Brake Division believes the price concession is necessary if his division is to get the contract for the airplane brake units. He has heard “through the grapevine” that the airplane manufacturer plans to reject his bid if it is more than $53 per brake unit. Thus, if the Brake Division is forced to pay the regular $8.10 price for the X52 fitting, it will either not get the contract or it will suffer a substantial loss at a time when it is already operating at only 50% of capacity. The manager of the Brake Division argues that the price concession is imperative to the well-being of both his division and the company as a whole. Weller Industries uses return on investment (ROI) to measure divisional performance. Required: 1. Assume that you are the manager of the Electrical Division. a. What is the lowest acceptable transfer price for the Electrical Division? b. Would you supply the X52 fitting to the Brake Division for $6.10 each as requested? 2. Calculate the net positive effect on the company's profit per brake unit the Electrical Division to supply the fittings to the Brake Division and if the airplane brakes can be sold for $53? 3. In principle, within what range would that transfer price lie?